Winners outnumbered losers for the second consecutive day, with 77 of the 100 stocks in the index declining, 21 rising and 2 remaining unchanged.
Of the 18 sectors tracked, computer storage, computer-aided design/manufacturing and semiconductors posted the sharpest declines, each falling 5 percent. The telecom equipment stocks were the day's largest gainers, rising nearly 1 percent.
In the broader markets, the Nasdaq composite index lost 200.61, or 4 percent, to close at 4,706.63, the second-worst point drop in its history. The Standard & Poor's 500 index fell 24.47 to 1,359.15, while the Dow Jones industrial average fell 135.89 to close at 9,811.24.
Intel closed down $4.25 at $117.88; Microsoft edged $2.88 lower to $95.13.
The initial public offering of FairMarket, a provider of auction software and networks, was the biggest percentage gainer on the Nasdaq. The shares jumped $31.50, or 185 percent, to $48.50. Volume topped 7.9 million shares.
Hyseq, a biopharmaceutical researcher, fell 32 percent today on news that the United States and Britain may require open access to human genome data. Although the company said it would not be affected by the proposal, the shares fell $20.50 to close at $42.
Among members of the CNET tech index, Inktomi posted strong gains.
Inktomi rose $17.13 to $206.13. The company today said it will expand its services into the wireless market.
Shares of 3Com slid $9.50, or 14 percent, to $54.81. The company's shares reached $119.75 before the spinoff of its Palm division two weeks ago.
Shares of RealNetworks fell $8.75, or 11 percent, to $66.25. The company announced today that it will license technology from competitor Microsoft.
LSI Logic dropped $11.75, or 13 percent, to $75.25. Gerard Klauer reiterated its "buy" rating of the company today.
LSI also pulled down the Philadelphia semiconductor index, which fell 86.26, or 6 percent, to 1,229.84.
Shares of Hewlett-Packard fell $6.50 to $140 after Xerox announced an alliance today with other companies in an attempt to unseat HP from the top spot in printer manufacturing.
Shares of Oracle could move early tomorrow. After the close of regular trading today, the database software company reported earnings of 17 cents per share, exceeding analyst expectations of 13 cents.